Nansen's indexes reveal insightful trends in the NFT space
The research branch of Nansen, a popular blockchain data firm, has published a meticulous twelve-page report quantifying the performance of Ethereum-based nonfungible tokens, or NFTs, since the turn of the year, unveiling a number of compelling indications as to the economic and cultural future of the ecosystem.
Citing the profound impact of traditional financial indexes such as the Dow Jones Industrial Average, S&P 500 and the Nasdaq Composite, the report contemplates the vast potential for comparable models focusing on NFT's, arguing that both education and adoption could be significantly enhanced through their wide-scale utilization.
Last month, Nansen released six NFT indexes: Nansen NFT-500, Nansen Blue Chip-10, Nansen Social-100, Nansen Gaming-50, Nansen Art-20, Nansen Metaverse-20, all which according to the accompanying blog post, were designed to “raises the bar for quality financial infrastructure that supports the growing depth of the NFT industry.”
Nansen’s NFT-500 index aggregates the performance of the leading 500 NFT collections on Ethereum for both ERC-721 and ERC-1155, across ETH and USD market capitalization. These collections equate to 85.4% of the daily market volume since 1 January 2022.
Assessing the performance of the NFT-500 index across the period Jan 1st to March 9th 2022, it is revealed that the price of assets increased by 68.5% when denominated in ETH, and gained 20.9% when measured in USD.
In contrast, the performance of the ETH index of the last 30-days — as illustrated in the line graph below — stands in stark contrast, recording -28.8% and -38.5% in ETH and USD, respectively.
Upon our request for specific clarification as to the calculation method for the numerical figure seen on the y-axis, research analyst at Nansen, Louisa Choe stated that “the index level is the value of an investment relative to its value at one fixed point in time. The index started at 1,000 on 1/1/2022.”
Source: Nansen. NFT-500 Line ChartCointelegraph conversed with Choe to ascertain a deeper understanding into how Nansen anticipates the impending influx of quantitative data sources, such as NFT indexes, positively influencing the industry.
Choe stated that “we believe that reliable data (both on a broad market level, like through the index, and micro level on a wallet basis) can help market participants to better navigate this space”, before sharing their intended purpose for the service.
“A key motivation behind the index was to enable users to separate the hype from reality, or to enhance their due diligence process.”Related: Blockchain analytics firm Nansen secures $12M in Andreessen Horowitz-led raise
In addition to providing NFT analytic dashboards and trend metrics for both retail and institutional investors across multiple timeframes, Nansen is also well-regarded for their decentralized finance (DeFi) services. In Nov 2021, the platform integrated data from Solana, Arbitrum, Fantom, and Avalanche, among others.
In June 2021, the company raised $75 million in a Series B round led by early-growth venture capital firm Accel, alongside further participation from the likes of Andreessen Horowitz (a16z) and Tiger Global, among others, and succeeding their $12 million Series A just six months prior.